The S&P/TSX composite index dropped 83.32 points to 15,118.77. The Canadian dollar was off 0.06 of a cent to 91.57 cents US.

U.S. indexes were lower as the Dow Jones industrials declined 75.07 points to 16,368.27, the Nasdaq gave back 20.08 points to 4,334.97 and the S&P 500 index lost 10.67 points to 1,909.57.

Ongoing tensions continued over the crisis in Ukraine amid fresh Russian sanctions on the West. Markets had initially shrugged off the standoff with Ukraine last month but tensions have been growing lately as traders worry about Russia getting more involved in the Ukraine government's fight against pro-Russian rebels.

"It has heightened up, I think it has caused nervousness to the markets for sure, and itâ€™s definitely something that needs to be continually watched," said Sadiq Adatia, chief investment officer at Sun Life Global Investment.

The sanctions war heated up Thursday after Russia banned most food imports from the West in retaliation for their sanctions over Ukraine.

Earlier in the morning, European Central Bank President Mario Draghi cautioned that the crisis in Ukraine could weigh on the fragile economic recovery in the eurozone. He said the fallout from Ukraine was â€œhard to assessâ€ but that sanctions and countersanctions could increase the impact.

On the earnings front, there was particular interest in the insurance sector where Manulife Financial boosted its quarterly dividend 2.5 cents to 15.5 cents a share. It is the first dividend hike since 2009, when it chopped the payment by half. Core earnings, which exclude extraordinary items, rose to 36 cents a share from 31 cents, four cents below expectations. Like the TSX index, the stock lost early gains and was down 27 cents to $21.70.

The dividend came as a surprise to investors who hadn't expected Manulife to start upping its dividend until next year.

"Dividend increases are a good sign and (as) we look at insurance companies as a whole, the outlook is quite bright," added Adatia.

Elsewhere, Air Canada (TSX:AC.B) says quarterly net income grew to $223 million, or 75 cents per share, compared to a loss of $23 million, or nine cents per share, a year ago. Operating revenues grew to $3.3 billion from $3.06 billion. Its shares fell 76 cents or 8.2 per cent to $8.50.

Canadian Tire Corp. (TSX:CTC.A) posted second-quarter net income of $178.9 million, or $2.12 per share, compared to $154.9 million or $1.91 a year earlier and above the consensus estimate of $2.02. Revenue increased to $3.17 billion from $3.02 billion and shares gained $2.73 to $107.26.

BCE Inc. (TSX:BCE) profits grew 6.1 per cent in the second quarter to $606 million, or 78 cents per share. Adjusted earnings grew to 82 cents per share from 77 cents, a cent short of estimates. Operating revenues increased 4.4 per cent to $5.22 billion and its shares dipped 31 cents to $48.57.

Financials were the worst performing group, down 0.8 per cent.

The energy sector was down 0.7 per cent as the September crude contract in New York gained 42 cents to US$97.34. Canadian Natural Resources Ltd. (TSX:CNQ) fell $1.03 to $44.82 as the company more than doubled its second-quarter net earnings to $1.07 billion

The base metals component fell 1.35 per cent as September copper gained a cent to US$3.18.

The gold sector was up 0.3 per cent as nervous traders sent the contract in New York up $4.30 to US$1,312.50 an ounce.

Note to readers: This is a corrected story. An earlier version said Canadian Natural's stock fell $1.02, rather than $1.03.

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